Kilpatrick testimony resumes on money trails from Civic Fund

Former Detroit mayor's federal corruption trial will resume Tuesday

8:59AM Video turns on and it appears that the lawyers are in a sidebar with the judge. Hard to tell because only one of the monitors has turned on this morning. Hoping that this does not forebode technical difficulties in the courtroom this morning.

9:06AM Sidebar disbanded. Still don't know why we had such a long break with Friday and Monday off. No reason was officially given for the court recess.

Mary Pugh. Pugh Capital Management in Seattle Washington. Worked there for 21 years. Asked to contribute in 2007 and 2008 to Kilpatrick Civic Fund. Has managed Detroit Police and Fire for over 15 years.

Exhibit 97 letter from August 20th 2007 from KCF asking for a contribution from Pugh Capital Management. Sent by fax.

Page discussing purposes of the KCF- to promote community activities and promote betterment of neighborhoods, educate Detroit residents to the importance of voting and support crime prevention.

Witness believed these to be purposes of KCF.

"No funds of Civic Fund donated to political campaign."

In 2007 donated $500. In 2008 donated $1500.

Exhibit 97A is the check.

Pugh Capital supports communities where they do business. Believed the funds would be used in civic activities forcused on kids and voters. Did not think they would be used for the mayor's personal purposes.

9:14AM Jim Thomas cross examines.

Never had contact with Kwame about donations.

How was letter sent to you? Assuming it was sent to us because we do business in Detroit.

Donation unsolicited? No contact by Police and Fire.

Do you have any specific knowledge how your money was spent? No.

Who interviewed you? Agent Ron Sauer.

How? By phone.

Was it Sauer who said that your check was used for personal purposes? He did not say that. Also spoke to Jennifer Blackwell says witness.

Witness says the question was if the checks were used for personal purposes was that what the donation was intended for.

Witness says they knew Civic Fun was a charitable organization.

Were you aware that 501c4 could be involved in political campaigns? No.

You don't know where money went? No.

You familiar with DIA? Orchestra Hall? Yes.

The 21st Century organization? No.

Government asked you only specific question "what would you do if"?

Judge interrupts and says that is not what she said.

Witness says they asked her if donation was used for political purposes.

Thomas asks personal or political? Political I believe.

Assumption about employees of Civic Fund. Do you know if Kilpatrick received salary? No.

Witness excused.

9:20AM New witness sworn in.

Blackwell for government.

Michael Nairne. Works at Chicago Equity Partners. Does Sales and Client Services. they manage institutional assets for pension funds.

At some point they had business with Detroit Police and Fire pension fund from 2006 to 2010.

KCF 99A- exhibit is a fax. Solicitation from Emma Bell sent August 24th 2007.

180 North Lasalle in Chicago is the address of Chicago Equity Partners.

Letter sates purposes of fund and what it was meant for. Witness took it to help and promote civic activities in Detroit.

Witness reads "sponsoring "Get Out the Vote" rallies, co-sponsoring charity little League football team from northwest Detroit, and sponsoring seminras on economic empowerment.

Witness made decision to donate based on the letter. Says it was keeping with what firm had done in the past. Different city and state charity events.

What is the last line of the letter? Witness reads "No funds donated to political campaign."

Would you have recommended it to use if you knew it was for Kwame Kilpatrick political campaigning? No.

To go to the La Costa resort for $8k? No.

9:45AM Thomas redirects.

What if Kwame went to La Costa resort and met with someone to get funds, is that legitimate?

Blackwell objects. Judge sustains saying there is no evidence that donor solicitation occurred. No evidence in the record to support that.

What about travel for raising funds and expenditures like airfare, hotels and food- could you see that? Yes.

Witness excused.

9:47AM Blackwell calls new witness.

Audio silence for sidebar.

9:53AM Sidebar ends.

9:55AM Blackwell calls new witness. Nicholas Degle. Consulting contract with Churchill Financial in Clearwater, Florida. Do business with several retirement systems in Michigan. Witness says client relations in Michigan since 2007. Was administrator in Detroit Pension funds until 2004.

Brought construction loan investments to Detroit since 2007.

Received solicitation from Jeff Beasley for KCF in May 2008.

KCF 4- Form letter from Christopher Jackson in June 2008 soliciting funds.

Witness says he thought purposes was to benefit community and citizens of Detroit. Reads the purposes stated on the letter.

Reads that no funds are donated to political campaign.

Talked with President about giving back to city. Witness says they wanted to give back to city they were doing business in.

Exhibit- copy of check to Kilpatrick Civic Fund. for $1,000. signed by Mary Settle. Date June 25th 2008. Faxed to the witness who hand delivered the check to the function on June 26th.

Would you have made donation if you knew funds were being used for personal or political reasons? No.

10:02AM Thomas cross examines.

Witness says he met Kwame once or twice before.

Kiplatrick Civic Fund a social welfare fund? Do not know what that is.

Contribution from corp to KCF? Yes.

Thomas goes back to solicitation letter. Not signed by Kwame? No.

Letter fairly broadly written would you agree? Yes fairly broadly.

You didn't believe fund was being precluded from political activity? Well last paragraph says no political campaign.

Well that's specific. but what about legislative issues, would that be political? Yes.

Understanding those issues important for community? Yes.

Educating residents on importance of voting that has political implication? Yes.

Letter doesn't foreclose political activity just contributing to a campaign says Thomas.

No funds donated to political campaign reads Thomas, that's specific.

Kwame Kilpatrick was the name of the Civic Fund, he was figure head? Yes.

Would you expect the KCF to run expenses? I don't know.

Well what about functions and staff. you would have expected there were employees of Civic fund and they would be reimbursed? Don't know if they would be employees or volunteers says witness.

Did Kwame speak? Yes.

To do all the things in the letter you would have to have people organize? Yes.

As figure head, would Kwame not have to travel to solicit funds? I don't know.

You were local but there were people from out of states. Would you have expected figure head to travel to solicit funds. I don't know about that.

If you had known that would that have affected your ability to donate? No.

10:10AM Blackwell redirects.

What about the mayor's family go to a spa resort in California, would you have donated? No.

What about spa services? No.

10:11AM Blackwell calls Ken Hudson. Works at Nuveen Investments. Investment Management firm been there 14 months. Was with Northpointe Capital which is based in Troy, Michigan. Also investment management firm. Small cap value and growth manager. Was in sales and marketing. Detroit Police and Fire pension fund. Funded in March 2007.

Said this was received in mail. Do you remember receiving it? It would have been placed on my desk.

Look at the exhibit. Do you see any folds in the letter to show it was mailed? No.

You recognize that in a corporation there are expenses? Correct.

You agree that for your corp you have to travel and you get reimbursement? Yes.

Reimbursement for your corp is something you are allowed to do? Yes.

You know Kwame at least in 2008 was figure head for KCF. Would you have expected him to travel? Yes.

Would you have expected Kwame to travel out of state to solicit funds? Yes.

If you learned that Kilpatrick had traveled to Colorado or California for Civic fund, could he be reimbursed for that? I guess.

But if it was for a fund-raising purpose, would you still consider donating? Probably.

What if money was donated to a campaign. What was your response? I said no.

Did you know there was a political purpose to the civic fund. I did not.

Would you agree sir that legislation is political? Yes.

There are campaigns for legislative issues.

Witness says their company that they can't donate to political campaigns.

But Thomas says legislative issues, voter education, not specific to political campaign but to politics? Yes.

If you knew Civic Fund had donated to NAACP, would that have affected your donation? Don't know.

The board of the Civic fund would make donation decisions? Correct.

10:30AM Blackwell redirects.

Would you have made same recommendation to donate if one of examples listed was to send Kilpatrick's sons to camp? No.

Yoga classes for mayor? No.

Water park for family? No.

Was it your understanding that no political purposes for funds? Yes.

10:31AM Thomas redirects.

You recognize that corporate purpose was broadly written? Yes.

No one told you about the facts of expenditures? Correct.

Thomas talks about Monday morning quarterbacking. No further questions.

Witness excused. Judge calls for 20 minute break.

10:47AM Heard more this morning from witnesses with organizations that had donated to the Kilpatrick Civic Fund. All were unanimous that they would never have contributed to the KCF had they thought it would go towards personal or political expenditures for Kwame Kilpatrick.

Kilpatrick took to twitter again over the weekend to express his displeasure with the trial:

"The Kilpatrick Civic Fund was a Political Fund. IT WAS NEVER A CHARITY! Donations not tax exempt & the fund had no obligation to give.#Truth."

So I guess referring to KCF as a charity is not wholly accurate. Technically, it should be referred to as a "non-profit."

Courtroom filling back up. Should be starting again momentarily.

10:57AM Passing out witness pictures to jurors for them to take notes on during testimony.

It's dark suit day for the defendants. Bobby Ferguson stands out slightly in a light grey suit and burgundy tie.

10:58AM Michael Bullotta calls Judy Smith. Judge swears in witness.

A crisis manager says witness. Undergrad in communications and has law degree. Has a public relations crisis management firm in DC. Been working in that for 20 years. Prior to that in US Attorneys office in DC. Also with White House and NBC. At US Attorneys mostly dealt with media.

A White House was President HW Bush's Deputy Press Secretary for 3 years. After that, worked at NBC and ran the communications department for 3 years. After that job, started her PR firm.

The firm represents corporations or individuals when they are facing crisis. Could range from product recall to financial takeover.

Worked with Monica Lewinsky and Michael Vick.

The show "Scandal" on ABC is based on her life and work.

Got a call from Kwame in early 2008. Needed some help with text message crisis.

When crisis involves legal situation, usually works with attorneys to develop legal strategies.

The goal was to help the legal team- they drive the communication strategy developed. While many attorneys are very good at law, some times they need assistance with media.

Witness helped Kwame deal with media during text message crisis.

Witness says it was 5 years ago but does remember messaging to the public that the mayor's team provided positive accomplishments.

Check dated May 1st 2008 for $30,000 to Impact Strategies. Witness says payment was for services rendered to mayor. On KCF check.

Check dated July 9th 2008 for $40,464.

Check dated October 29th 2008 for $25,000 to Impact Philanthropy. It was a non-profit the witness had started. Witness says she couldn't talk about the intent of the check but she had talked about her non-profit which was in LA.

There is still some outstanding amount to the tune of $60,000. Book keeper wrote it off.

Paid by mayor in March 2008 $11,000 in cash. Can't remember if it was in the office or at home.

11:10AM Thomas cross examines.

Thomas says we know each other.

You were engaged by mayor before I was lawyer? Yes.

Before criminal case was brought? I believe so.

We have worked together? Yes.

Your job is image consulting? I don't see my job as image consulting. When there is legal situation, that takes precedence.

There was previous consultation with Kwame in the earlier years? Yes.

Introduced by a neighbor? I think so.

Your first contact was related to a text message scandal? Yes.

You were aware of text messages in media? Yes.

And litigation that was going to ensue regarding Freedom of Information Act? Yes.

Crisis management was about text messages previously? Yes.

How did you do it? Depends on the situation. Don't remember particular advice. Want legal team to focus on legal and client focus on what client should be doing.

You had 2 individuals as staff back at work? Yes.

You came to Detroit? I didn't live here. But yes.

Your room was paid for? Yes client usually pays for travel.

Meals and hotels? Yes.

Purpose was to consult Kwame about an issue and how his image could be affected? I would disagree with that. When dealing with a crisis, particularly when litigation is coming, that everything you do is in line with that. What we tried to do based on legal strategy was to make sure everyone was clear from a communications standpoint.

Witness says helped to deal with surrounding messaging.

You said you did no work for KCF? Correct.

But you did receive checks from KCF? Correct.

Thomas bring back first check for $30,000. Did you know April Edgar and Kandia Milton?

Witness says yes, check negotiated and paid.

Did you know that Kilpatrick Civic Fund, well did you know Kwame's relationship to it? No.

Looking at second check for $40,464.24. Based on work you did for Kwame? Yes.

Thomas says you were aware that Kwame was under siege on many levels? Correct.

Did you advise him how to handle legal, media and personal fronts? Not on the last front.

Witness says if there was advice based on event coming up, she didn't see that as transcending into personal.

Witness agrees with Thomas there is clearly a connection between legal and media.

You were in Detroit often? Yes.

Were you aware that he spoke to different groups? Yes.

Did you know if he was engaged in fund-raising? I know that he had started a legal defense fund.

Brief stop. Switching court reporters for no apparent reason.

When the text message scandal hit, you were aware that the momentum in the city had stopped? Yes.

Part of your job was in moving things forward and change the message? Part of my job was to organize a communications strategy.

Were you successful? Yes I think so.

Witness says when you have a legal situation with a person who is indicted or about to be indicted you want to let the legal team go ahead and do their job.

Did you promote him to go ahead and promote positive things for the city? Yes. I do remember about positive messaging about things going on for the city.

Did you meet Christine Beatty? Yes.

Did she appear hard-working? Yes.

An effective administrator? Can't speak to effectiveness but know she was a hard worker.

Do you know who was running civic fund? I don't.

You don't know why those checks were received from KCF? No.

Looking at Impact Philanthropy check. Discussed with Kwame the kinds of things you wanted to do? Yes.

Did you know that in October 2008 he was about to go to jail?

By that point your job was done? Correct.

From your testimony, this is something that you wanted to do and he gave you a check? No we discussed that I wanted to get more involved in service.

Witness says they have done several walks for cancer research.

Impact philanthropy payment was not a payment to you? No it was a contribution.

Your relationship with Kwame was a good one? Yes.

Did you have an opinion on Kwame? No. I work with lots of different clients.

Service and life choices were things you were able to observe with Kwame? Yes.

You didn't solicit the money, it arose from conversation? Yes.

11:30AM Bullotta redirects.

You said you don't know April Edgar? No.

But you do know Kandia Milton? Yes.

Who would have been billed for services?

Thomas objects.

Bullotta asks for KCF 54- who would have been billed for services? The mayor.

Second check, who would have been billed? The mayor.

What was your goal? My goal in any crisis is to help client navigate the crisis. The key component of the crisis was legal.

Was your goal to help city of Detroit? No.

Is part of what you do getting the client to face truth of situation?

Thomas objects.

What did you tell Kwame about facing the truth? I don't recall speaking to client about that particular issue.

11:33AM Thomas redirects.

You weren't his lawyer? No.

Witness says that when they deal with crisis, they always start with objective.

Was his image any part of that goal? I think for us because of the looming situation, the legal was most important.

you were aware he plead guilty? Yes.

He did acknowledge responsibility for what he did? Yes you have to.

Thomas consults with Kwame.

You've worked in crisis management for other individuals, political and businessmen? Yes but I can't say because of confidentiality agreement.

How you are paid, the decision on how to pay you, you don't get engaged in that? Correct.

And they will make that decision based on appropriate factors? Correct.

11:36AM Bullotta calls William Brane Scott.

Witness wearing a mock turtleneck and navy v-neck sweater. Must be another investment guy.

Wrong- he's a golf club salesman! King par Superstore in flushing, Michigan. Was also employed at Tom Deaton's Golf Center in Howell. Butch Rhodes was Kwame's golf instructor.

At some point, Rhode's gave him a check. KCF 10- payment for clubs and a staff bag.

A check from KCF to Tom Deaton Driving Range for $3,050 on September 14th 2008.

Thomas objects. Judge sustains and says lay foundation.

Had ordered golf clubs and bag embroidered "the Mayor".

The clubs were stainless titanium and unitized putter. Witness says set was "good stuff". "Nike makes good stuff"

Nike did embroidering.

Witness provided bags and clubs to Rhodes.

Was it something less than the check? Witness doesn't know to a dollar amount.

Witness says it was rung up on register as that total.

Do you know what the Kilpatrick Civic fund was? No.

What was your relationship with Rhodes? He brought in clients from time to time.

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